Indian techies dominate start-up scene in US

Last updated on: January 04, 2007 09:30 IST

Indian immigrants are a significant driving force behind the creation of new engineering and technology companies in the United States in the past decade than their counterparts from the UK, China, Taiwan and Japan put together.

Of an estimated 7300 US tech startups founded by immigrants, 26 per cent have Indian founders, CEOs, presidents or head researchers, a new study says.

"Indians have beaten the Chinese in start-up hotbeds like Silicon Valley with a share of 15.5 per cent, up from 7 per cent between 1980 to 1998, " says the study, "Silicon Valley's New Immigrant Entrepreneurs", by researchers in the master of engineering management programme at the Pratt School of Engineering at the Duke University.

The study, which covered 28,766 firms with annual sales of more than $1 million and 20 or more employees, comes nearly eight years after an influential report from the University of California, Berkeley, on the impact of foreign-born entrepreneurs.

"This study shows the tremendous contribution immigrants in general and Indians in particular are making to the US economy and global competitiveness. This is a win-win for America and for the immigrants that make it here," Vivek Wadhwa, Delhi-born Duke's executive in residence and the founder of two tech startups in North Carolina's Research Triangle told PTI.

Wadhwa, project's lead researcher, stressed that "the country should make the most of its ability to "get the best and brightest from around the world."

"Indians constitute less than one per cent of the US population and are starting many times the businesses as other groups. They are creating jobs and contributing tens of billions to the US economy. Without Indian entrepreneurs, it would not be the same", Wadhwa said.

AnnaLee Saxenian, study co-author and dean of the School of Information at UC-Berkeley, estimated immigrants founded about 25 per cent of Silicon Valley tech companies in 1999.

The Duke study found the percentage had more than doubled, to 52 per cent in 2005. The research debunks some recent myths about the notion that immigrants who come to the United States take jobs from Americans.

"The advantage of entrepreneurs is that they're generally creating new opportunities and new wealth that didn't even exist before them," Saxenian said.

"Just by leaving your home country, you're taking a risk, and that means you're willing to take risks in business. You put them in an environment that supports entrepreneurship, and this is the logical outcome."

Immigrants from the UK set up 7.1 per cent of the companies, followed by China with 6.9 per cent and Taiwan with 5.8 per cent.

Immigrant entrepreneurs' companies employed 450,000 workers and generated USD 52 billion in sales in 2005, according to the survey.

The share of Chinese and Taiwanese start-ups, which was 17 per cent in 1990-98 period, came down to 12.8 per cent between 1995 and 2005. The report adds that the number of Indian scientists and engineers in Silicon Valley has grown by 646 per cent between 1990 and 2000.

Indian immigrants dominated even on a state-wise basis. While in New Jersey, the share of Indian start-ups was a whopping 47 per cent, in Texas, it stood at 25 per cent. This was followed by California with 20 per cent, Florida with 18 per cent, New York with 14 per cent and Massachusetts with 10 per cent.

The study reveals that California, which houses the Silicon Valley, has emerged as the favourite destination for immigrant Indian entrepreneurs.

Around 26 per cent Indian startups were set up there. Around 36 per cent companies in the software sector were Indian, while in the innovation and manufacturing-related services, the figure was 24 per cent. In semiconductors, Indian start-ups shared the top place with the Chinese with a share of 15 per cent each.

However, the Indians failed to dominate in sectors like computers and communications, where their share stood at 15 per cent, lower than the Chinese (19 per cent) and Taiwanese (17 per cent).

The study shows that the largest number of companies started by Indians are in the software sector (46 per cent), followed by start-ups in the innovation and manufacturing-related services (44 per cent).

The Duke study found that 52 percent of Silicon Valley companies - and 39 per cent of California startups - were founded by foreign-born entrepreneurs.